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The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice.

  • What is an Initial Public Offering (IPO)?

    An IPO, sometimes known as a ‘flotation’, occurs when a privately owned company sells shares for the first time to gain a listing on the stock market. It can also involve the issue of additional shares by a company that’s already listed. Funds raised by an IPO go straight to the company.

  • How do IPOs work?

    There are usually five stages to an IPO:

    • Intention to float
    • Price range and prospectus announced
    • Offer period
    • Offer closes and final pricing and allocation confirmed
    • Trading
  • What is an intention to float (ITF)?

    A company announces an IPO by issuing an ITF notice to a recognised stock exchange such as the London Stock Exchange (LSE). The ITF includes information such as the company's investment highlights and details of who can invest for example, institutions, professional investors and private retail investors.

    During the ITF stage, you can register an interest with a stockbroker or investment service taking part in the IPO, such as Barclays Smart Investor, but you can’t place an order. They’ll keep you informed about the offer timings and when the IPO launches.

  • What is an offer period?

    When the IPO launches, the company publishes its approved prospectus, pricing notification and any other key offer documents. The company also confirms what’s known as the ‘offer period’ for the IPO. This is the window during which you can buy shares at the launch price, before they start trading on a stock exchange such as the LSE. The pricing notification provides a guide range for the expected price of each share, but it isn’t guaranteed and the price could end up higher or lower. The 'offer period' can close early due to high demand.

    Remember, you should only invest in an IPO after reading the prospectus and if you fully understand the risks involved.

  • When will I know how many shares I have been allocated and the price?

    Once the offer period closes and all applications are processed, the company announces the final price of the shares and the allocation policy. This usually happens within 48 hours of the offer closing.

    If an offer is oversubscribed, you may receive less than you requested, known as 'scale back'. How this works is explained in the company's allocation policy. If the company doesn’t provide one, we'll use our own allocation policy.

    When you apply through an authorised distributor - a broker that sells the shares on behalf of the company, such as Smart Investor - you will receive an email confirmation on the day the shares are allocated.

  • Can anyone apply to invest in an IPO?

    Smart Investor generally accepts applications from UK residents. However, the company participating in the IPO will set out further details of who can invest in the prospectus.

  • How do I apply to invest?

    Before you invest, make sure you read the company’s prospectus, pricing notification and any other key offer documents. It’s important to fully understand the risks involved - the value of your investment could fall dramatically after the shares become available on the stock market.

    Provided you are eligible to invest and meet the criteria outlined in the prospectus, you can invest online or by calling us on 0800 279 36671 or 0141 352 39191.

    Smart Investor only accepts new account applications from residents in the UK.

    If you are unsure whether an IPO is right for you, please seek financial advice.

  • Is there a minimum or maximum amount I can invest?

    Each IPO has a minimum investment - typically £1,000 - but no maximum. You can find out more about the minimum investment in the prospectus.

  • Which accounts can I apply through?

    You can apply through all Smart Investor accounts.

  • How much does it cost to apply through Smart Investor?

    We don’t charge any transaction fees to invest in an IPO. However, we may receive a payment from the issuing company. You can find out more in the Terms of Offer once the IPO launches.

  • Is there a minimum holding period once I’ve been allocated my shares?

    There’s no minimum holding period, unless special conditions apply for shareholder benefits, which should be outlined in the prospectus.

    Otherwise, you can sell your shares as soon as the final allocation is credited to your portfolio. This typically happens 48 hours after the offer closes and once the company announces the price and allocation policy.

  • What is 'conditional' dealing?

    Once the IPO closes, the shares start trading on the stock exchange. Depending on the level of demand, the share price can be more or less than the price paid in the IPO.

    There’s a period of 'conditional' dealing that normally lasts for three days after the IPO. This allows the shares to settle and obtain a full listing on the stock exchange. During this time, certain transactions aren’t allowed, such as buying the shares within an ISA.

    If the company decides to cancel the IPO during conditional dealing, all transactions will be cancelled.

  • Are there any special benefits provided by the company for investing?

    Any shareholder benefits, special discounts and terms are explained in the prospectus.

  • What risks are involved in investing in an IPO?

    IPOs can be an exciting investment opportunity. But as with any investment, you should make sure you understand the potential risks involved.

    IPOs can be volatile and the share price may fall dramatically once the shares are available on the open market. When investing in an IPO, you won’t know the share price until the offer closes. A range is provided in the prospectus and pricing notification, but it isn’t guaranteed and you could end up paying more than expected.

    You should only decide to invest in an IPO based on the prospectus, pricing notification and any other key offer documents issued by the company. If you’re unsure whether an IPO is right for you, seek financial advice.

  • How can I find out about IPOs available through Smart Investor?

    You can find information on current and potential IPOs on our website. To stay up to date on current IPOs available through Smart Investor register your interest and we’ll keep you informed.

    Not all IPOs are available through Smart Investor. This can be due to a number of factors such as the size of the IPO, third-party restrictions or limited availability to institutional/professional investors.

Frequently Asked Questions about new issue retail bonds

  • What are new issue retail bonds?

    When you invest in a new issue retail bond, also known as a fixed income new issue, you’re effectively lending money to a company in return for a fixed interest payment. Your investment is repaid on a specified end date.

    New issue retail bonds launch on the Order book for Retail Bonds (ORB) through the London Stock Exchange (LSE). They’re usually considered lower risk than investing in the shares of the company. If a company is wound up, bondholders are paid before shareholders, so there is less chance of losing your money.

    However, if the issuer of the retail bond fails to meet their obligations, you may get back less than is due to you and your investment is not covered by a financial compensation scheme.

  • How do new issue retail bonds work?

    Companies looking to issue new retail bonds announce to the market that they’re launching a new bond. They confirm the rate of interest, loan period, credit rating if applicable and any other key information about the bond.

    The company also produces a prospectus and may issue an information booklet. You should only invest in a new issue retail bond once you’ve read the prospectus and fully understand the risks involved.

  • What is the offer period?

    At launch, the company also confirms the bond’s offer period. Similar to an IPO, this is the window during which you can invest before the bond starts trading on the secondary market. Issues of new retail bonds can close early due to high demand with only hours notice given to investors in some cases.

  • How long is the offer period open?

    Depending on the company, the offer period can last between two and four weeks. As mentioned above, new issue retail bonds can close early due to high demand.

  • What happens after the offer period closes?

    The company confirms your allocation of the bond and the date the bond launches on the market, usually within 24 hours of the offer period closing.

  • When will I know my allocation?

    The company confirms your allocation of the bond and the date the bond launches on the market, usually within 24 hours of the offer period closing.

    If an offer is oversubscribed, you may receive less than you apply for, known as 'scale back'. How this works is explained in the company's allocation policy. If the company doesn’t provide one, we'll use our own allocation policy.

  • What happens once the bond launches on the market?

    Once the bond launches on the market, a buy/sell price is made available, which might be more or less than the price the bond was issued at. It’s influenced by factors such as changing interest rates, company performance, news and the credit rating of the issuing company.

  • What will the rate of interest be and when will it be paid?

    These details are explained in the prospectus and information booklet.

  • Can anyone apply to invest in a new issue retail bond?

    The company issuing the bond will confirm who can invest in the prospectus.

  • How do I apply to invest in a new issue retail bond?

    Before you invest, make sure you read the company’s prospectus and information booklet and fully understand the risks involved. The value of your investment could fall dramatically if the issuer fails to meet their obligations.

    Provided you’re eligible to invest and meet the criteria outlined in the company prospectus, you can invest online or by calling us on 0800 279 36671 or 0141 352 39191.

    Smart Investor only accepts new account applications from residents in the UK.

  • Is there a minimum or maximum amount I can invest?

    The minimum investment for a new issue retail bond typically starts at £2,000 and increases in increments of £100. There’s no maximum amount you can invest. One share in the bond is equal to £1.

    You can find details of the minimum investment in the prospectus and information booklet.

  • Which accounts can I apply through?

    You can apply through all Smart Investor accounts.

  • How much does it cost to apply through Smart Investor?

    We don’t charge any transaction fees to invest in a new issue retail bond. However, we may receive a payment from the issuing company. You can find out more in the Terms of Offer once the bond launches.

  • What risks are involved in investing in a new issue retail bond?

    The value of bonds can fall as well as rise and you may receive back less than you invest if you sell bonds before maturity.

    Also, if the issuer defaults on interest payments or fails to repay your initial investment, you may receive less than you are entitled to and your investment is not covered by a financial compensation scheme.

    You should only decide to invest in a new issue retail bond based on the prospectus, information booklet and any additional key offer documents issued by the company. If you’re unsure whether a new issue retail bond is right for you, seek financial advice.

  • How can I find out about new issue retail bonds on Smart Investor?

    Find out more about new issue retail bonds

    Not all new issue retail bonds are available through Smart Investor. This can be due to a number of factors such as the size of the issue, third-party restrictions or limited availability to institutional and professional investors.

IPOs and new issues

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